Measuring the total economic value of a park system to a community

Abstract

In the political arena, it is almost always advantageous to frame an issue in economic terms when seeking support from a legislative body. This paper describes, measures, and provides illustrative examples for estimating the economic value of 12 benefits associated with urban parks. Seven of these constitute a template for measuring the economic value of an urban parks system that has been developed and refined by empirical studies undertaken in 12 US urban areas by the Trust for Public Land. The remaining five are suggested measures that might be added to the template. The paper concludes by identifying five other park benefits for which no measure of economic value appears to exist at this point.

Keywords:

• urban parks
• economic value

Notes

1. There is always a trade-off in research between resources and accuracy. An enhanced level of accuracy invariably requires more time and money. It is recognized that each of the measures described in this paper could be refined to enhance accuracy. Indeed, in some cases, more refined versions of a measure can readily be found in the scientific literature where the unit of analysis is an individual project, facility or event. To accomplish that at the level of a complete park system would be prohibitively costly for most park agencies. However, the CCPE work has shown that agencies can commit sufficient resources to produce gross estimates of economic value using methods that are viewed as reasonable.

2. The technical term used to describe the difference between what participants actually pay for a service and the highest amount they would be prepared to pay is consumer surplus. An individual may pay $3 for admission to a park but would have been willing to pay $5; a swimmer may pay $2 but would have been content to pay $4. In these cases, the consumer surplus would be $2. By adding up these surpluses from all participants, an estimate of the total can be made. Consumer surplus can be measured by asking participants, “What increase in price over the current price would have caused you not to participate?” The consumer surplus in Table 2 shows the full potential value contained in one particular park system.

3. A challenge with using a questionnaire to elicit willingness to pay is persuading respondents to answer truthfully. Some may “strategically bid” by answering in ways they anticipate will shift the payment burden to others. If they believe there is a real likelihood of increased fees, they may understate their real willingness to pay. In contrast, if they believe there is little likelihood of a higher fee, they may deliberately overstate their willingness to pay – on the theory that officials may be impressed enough to allocate greater tax support for the service.

4. This assumes that the contributions of the new businesses are additive and have not merely displaced existing businesses. For this reason, new retail businesses should be excluded since they often do result in displacement.

5. Under the act, the state invested $433 million per year in after school programs servicing 485,000 students in grades K through 9. With the local 50 percent match, the cost per student was $1350 per year and the costs were projected out over nine years for which students were eligible (costs and benefits were calculated in present values using a discount rate of 4%). The net societal benefit for each participant was found to be between $79,484 and $119,427 over the nine year period.